Russia’s corporate debt trading soars as sanctions fail to deter

Trading in Russian corporate debt soared to its highest levels in at least two years this month, even as the U.S. and allies tighten sanctions on Moscow in a bid to restrict investor demand for its assets.

The average daily trading volume for dollar-denominated Russian corporate bonds rose to a level last seen in March 2020. The average trading volume for this month, as of March 14, was $258 million, compared with $96 million in the same month last year, according to data from MarketAxess.

Trading activity of Russian corporate debt spiked even as uncertainties mount on whether these companies will or can service their debts in foreign currencies. Banks including Goldman Sachs Group Inc. and JPMorgan Chase & Co. have been capitalizing on trading opportunities since Russia invaded Ukraine by purchasing beaten-down company bonds tied to Russia as hedge funds look to scoop up cheap assets.

Names such as Yandex, Lukoil, Gazprom, Novolipetsk Steel and Russian Railways were among some of the most traded Russian corporate names in March, according to the data. Strategists at JPMorgan Chase & Co recommended clients boost their positions in Lukoil and Novolipetsk debt in a note sent March 4.